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RISK AVERSION SEES US EASTERN PORTS GAIN IMPORT EDGE OVER WEST

By

Laura Curtis

+Follow
April 18, 2023 at 11:00 AM GMT


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Fresh data out Monday laid bare how importers have shifted their preferred
destinations for cargo to ports on the US East Coast, favoring them over the
traditional powerhouses on western shores.

As of April 11, only 36% of imported goods arrived through West Coast ports, the
smallest proportion since at least mid-2021 and down from 42% in the second half
of 2022, according to Chicago-based FourKites, a logistics-visibility platform.
In four of the previous six months, West Coast ports have moved less than 40% of
import volumes.


SHIPPERS DIVERTING TO US EAST COAST FROM WEST

Eastern US ports grow proportion of import shipments relative to west



Source: FourKites tracking data

Note: includes import shipments arriving to US ports for FourKites customers;
data for April 2023 are through April 11; data for July-August 2022 not provided

While inbound cargo volumes have declined at all US ports since the fourth
quarter of last year, West Coast operations have seen a bigger drop-off as
importers seek to avoid a repeat of pandemic-era delays and
protracted labor-contract talks that saw labor disruptions earlier in April at
the Los Angeles and Long Beach complex — the busiest in the US.

Though work on the docks has largely continued without issue since the contract
expired on July 1, recent labor shortages and slowdowns at the two largest West
Coast ports have caused alarm among importers that were already diverting some
of their goods to terminals in the East and Gulf.

Dwell times — or the number of days that containers sit on docks awaiting either
trucks or trains to move them — have fallen significantly at the West Coast hubs
despite the labor issues, with a 28-day average for import dwell time of 4.8
days, according to FourKites. The measure of delays fell more at East Coast
ports to 3.3 days in the same period.

“The US West Coast has long been a strategic artery for global imports, but with
constant bottlenecks, delays and lingering labor disputes, supply chains are
relying on risk aversion instead of rolling the dice,” said  Glenn Koepke, the
general manager of FourKites’ network collaboration.

The labor issues are proving to be minor inconveniences more than they are
severe disruptions, and West Coast volumes will steadily rise to become balanced
with the East Coast in the middle of the third quarter, when retailers and
importers gear up for the holiday season, he said.

Still, the infrastructure investments and performance of the East Coast will
create more competition for LA-Long Beach, which will help achieve longer-term
stability and reliability, according to Koepke.

European Cargo Shifts

Meanwhile, cargo flowing through some parts of northern Europe are still
suffering from Russia’s war in Ukraine and a soft economy.

The Port of Antwerp-Bruges said throughput totaled 68.7 million metric tons in
the first quarter, down 4.5% from the year-earlier period.

“This decline is due to the still complex geopolitical and macroeconomic
context, which has led to a decline in the container segment and significant
shifts in cargo flows,” the Belgian port said in a recent report.



Read more: 

 * Cost of US Port Strike Seen at $500 Million a Day: Supply Lines
 * LA, Long Beach Ports Cargo Flows Snarled by Ongoing Labor Strife

—Laura Curtis in Los Angeles


CHARTED TERRITORY


THE SHORT LIST OF ELIGIBLE EVS

Only 10 models qualify for the full $7,500 US tax credit



Source: US Treasury Department

Note: Chevrolet Blazer is available summer 2023, and Silverado and Equinox are
available fall 2023. Tesla Model 3 Performance qualifies for full credit and
Standard Range version is eligible for $3,750 credit.

Short list | Only 10 electric and plug-in hybrid vehicles will qualify for
$7,500 federal tax credits in the US after stricter battery-sourcing rules take
effect and render most plug-in models ineligible. General Motors, Tesla
and Ford all have at least one EV that will qualify, while Ford and Stellantis
each have one eligible plug-in hybrid model. No other automakers will have a
vehicle for sale that fully meets the criteria that was finalized last month and
will kick in on Tuesday, according to the Treasury Department. The requirements
included in the Democrats’ marquee climate law — the Inflation Reduction Act —
will roughly halve the number of vehicles that can receive the full tax credit
relative to how many were eligible during the first few months of the year, when
Treasury was finalizing its guidance for meeting the rules. Seven additional
vehicles made by Tesla, Ford and Stellantis will qualify for half credits,
meaning $3,750 will be available to eligible consumers.


TODAY’S MUST READS

 * Security nightmare | Ransomware attacks and hacking incidents have spiked in
   Japan, and in a nation that exported chip components worth $42.3 billion last
   year — dominating the supply of some materials — supply-chain issues can have
   global implications.
 * Fire warning | Bangladesh’s garment factories, a key source of foreign
   exchange for the South Asian nation, face the heightened risk of fires as
   summer temperatures soar, an industry lobby group warned.
 *  New sedan | Volkswagen’s namesake brand is unveiling its first fully
   electric sedan as the German carmaker struggles to move past software
   setbacks that have hurt sales. Meanwhile, Indonesia is urging Volkswagen to
   invest in its electric vehicle industry as the country seeks to
   counterbalance Chinese companies’ dominance over its nickel reserves.
 * New blockages | Ukraine’s crop exports are being threatened again, with Black
   Sea shipments halting just as some of its European Union neighbors stop
   allowing imports of its cargoes.
 * New attitude | BMW has adopted “a completely new approach” to supply chain
   management as a result of Covid.
 * Renewables conflict | The Pentagon is sounding alarms over Biden
   administration plans to advance offshore wind projects along the central
   Atlantic US coast, warning that almost all of the new terrain eyed for
   development conflicts with military operations. 


ON THE BLOOMBERG TERMINAL

 * Demand dip | Relative demand in North America’s spot trucking market loosened
   in the week ended April 14, with a 4.9% drop in Truckstop’s Market Demand
   Index. The spot market may reach a bottom at some point this quarter, with a
   potential rebound in the second half, setting up a better environment for
   contract rates, Bloomberg Intelligence says. 
 * Struck down | The World Trade Organization said India violated international
   trade rules when it imposed tariffs on imports of mobile phones, headphones
   and an array of other technology products.
 * Run SPLC after an equity ticker on Bloomberg to show critical data about a
   company's suppliers, customers and peers.
 * Use the AHOY function to track global commodities trade flows.
 * Click HERE for automated stories about supply chains.
 * On the Bloomberg Terminal, type NH FWV for FreightWaves content.
 * See BNEF for BloombergNEF’s analysis of clean energy, advanced transport,
   digital industry, innovative materials, and commodities.


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Don’t keep it to yourself.  Colleagues and friends can sign up here. We also
publish the New Economy Daily, a briefing on the latest in global economics.

For even more: Follow @economics on Twitter and subscribe to Bloomberg.com for
unlimited access to trusted, data-driven journalism and gain expert analysis
from exclusive subscriber-only newsletters.

How are we doing?  We want to hear what you think about this newsletter. Let our
trade tsar know.





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